Samsara, a Silicon Valley company that makes sensors for factories and vehicles, is laying off 300 employees and raising $400m in capital at a discounted valuation, marking another sign that hot start-ups are facing pressures from the Covid-19 crisis.
Sanjit Biswas, chief executive, in an email to staff on Wednesday, said the cuts represented about 18 per cent of the company’s workforce. He said the company had initially planned to raise capital in the second half of the year but had sped up the process because of the coronavirus pandemic.
“These changes are necessary to ensure Samsara’s financial integrity, even under worst case economic conditions,” Mr Biswas wrote. The lay-offs would be concentrated in operations in three European regions and an industrial machine vision group, as they face the longest paths to profitability.
Samsara’s existing investors, which include Andreessen Horowitz and Tiger Global Management, and new investors, including the private equity groups General Atlantic and Warburg Pincus, valued the company at $5.4bn following the new cash infusion, according to one person briefed on the matter.
That represented a 14 per cent decrease from Samsara’s last $300m funding round in September, which assigned the company a $6.3bn valuation. The Financial Times previously reported that Samsara was in advanced discussions about raising money at a discounted price.
The news shows how some of the hottest start-ups have been forced to take measures to shore up their finances in the face of the crisis. Last month, the travel group Airbnb raised $2bn in debt and equity warrants giving the company an implied valuation of $18bn, down from the $31bn mark it received from investors in 2017.
Samsara’s software and sensor technology is used by big transportation and manufacturing groups to manage vehicle fleets and industrial operations.
Mr Biswas said the company had planned to more than double its revenue this year and had made hiring decisions based on those expectations. Samsara previously said in September that revenues were growing at more than 200 per cent annually.
“It’s hard to see how we can maintain that same recurring revenue growth forecast with everything ahead of us, which is why I had to make the difficult decision to bring down our operating expenses with a lay-off,” Mr Biswas wrote in the email.